EU retains, UK cuts interest rates

The European Central Bank (ECB) left interest rates untouched on Thursday while the Bank of England lowered its by a quarter point.

10 Jul 2003 18:20 GMT

Two different decisions oncut in interest rates

ECB President Wim Duisenberg said interest rates would remain the same for a considerable period of time as the euro zone economy was expected to gradually start picking up by the year end.

Referring to the decision not to cut interest rates Duisenberg said, "It shows how confident we are that we are on the good track with the monetary policy stance," Duisenberg told a news conference after the ECB's decision to leave its benchmark

interest rate unchanged at a record low 2.00 percent.

Bank of England differs

Financial markets focussed instead on the Bank of England, which on Thursday cut its key interest rate a quarter point to 3.5 percent, citing a hesitant global economic recovery.

The Bank of England cut its benchmark interest rate in an attempt to breathe new life into a sluggish global economic recovery.The reduction takes rates to a new 48-year low.

Announcing the cut, the central bank in a statement said the global economic recovery had remained hesitant.“Although the preconditions for recovery remain in place, the prospect for external demand for UK output is weaker than previously

expected," it said.

The move brings British interest rates closer in line with those in the United States and Europe.

In the United States the Federal Reserve recently slashed rates to a 45-year low point of 1.0 percent.